Britons pile into shares to profit from 'great rotation'

A £10,000 investment in the Footsie has already turned a £640 profit in a
month. Investors are now hoping the index - now 6347 - will charge up to
7000 points.

If equities are rising, it means that investors are recovering their appetite for risk, which in time ought to bring about a virtuous circle of bolder decision making, job creation and growth in the real economyPhoto: Reuters

Related Articles

The rally will also have added billions of pounds to the value of company and private pension funds held by eight million Britons.

Analysts have called the shift “the great rotation” where investors sell bonds, safer assets that were popular in the financial turbulence of recent years, to buy shares, which are regarded as higher risk.

Investors have been emboldened by an unusually prolonged lull in the debt crises that have dogged the eurozone over recent years and the US in recent months.

Investment companies have been shocked by the sudden rise in demand. Fidelity, one of the UK’s largest fund companies, said sales of stock market funds in January were up by 160 per cent on a year ago. “It’s been an exceptional start to the year,” said Mark Till, head of personal investing. “If I’m honest, it’s surprised me. It’s the most money we’ve taken in seven years, which is as far back as our records go.”

TD Direct, a stockbroker, said demand for shares was up 23 per cent on the previous week with Lloyds, Vodafone and Barclays popular with individual traders.

America’s Dow Jones index pushed through 14,000 points for the first time since 2007.

Some analysts were last night urging caution. James Butterfull, equity strategist at Coutts, said: “Investors shouldn’t get too carried away and should bear in mind that there will be volatility.”

But James Bartholomew, author of the Daily Telegraph’s Diary of a Private Investor column, said: “Frankly, I feel it does not matter so much right now which shares one owns. The important thing is to be in shares at all.

“It would not be surprising to see the index challenging its all-time high of almost 7,000 by the end of the year.”

>> Read James Bartholomew'sfull column in Your Money in The Daily Telegraph on Saturday.

The Telegraph Investor

Editor's comment:

Priced to be great value for new investors and those with large portfolios.